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Modulating Say on Pay

Advisory votes in the U.K. have helped make CEOs' compensation more sensitive to poor company performance, study says.

By Susan Kelly | Updated on September 01, 2009

Top executives’ taking home huge sums of money as their companies ran aground has sparked a visceral protest throughout the country and motivated shareholders to attempt to have some say in compensation practices. The first proxy measures asking U.S. companies to allow a so-called say on pay came up in 2006. This year, shareholders at more than 20 U.S. companies voted on executive pay, and that number could surge now that Congress seems likely to pass a law requiring all public companies to give shareholders a nonbinding vote on executive compensation.

Business groups are lobbying hard against the legislation, but a look across the Atlantic, where big U.K. companies have had such votes since 2003, suggests letting shareholders weigh in on pay might not be such a big deal.

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